(Trinidad Express) Specialist maritime attorney Nyree Alfonso says that arresting the tug Solo Creed to recover $244 million could become “a case of the candle costing more than the funeral,” as she believes the expenses and efforts of this legal pursuit might ultimately outweigh any financial recovery.
Alfonso stated that, based on her 31 years of experience, she believes the Government may end up having to sell the Solo Creed and could recover less than US$1 million from that sale.
As such, she believes we should temper all expectations regarding the situation.
Alfonso made the comments during a telephone call with the Express yesterday as she responded to the Energy Ministry’s statement that the Solo Creed tug was arrested in Angola to secure Trinidad and Tobago’s claim for more than over $244 million in damages resulting from the oil spill in Tobago in February.
“Generally, when you arrest a vessel, it is for the purposes of providing security for whatever damage, loss, indebtedness that has arisen. So one would want to look very critically at the vessel you arrest,” Alfonso said.
Alfonso said in this case it is a single tug that has been arrested.
“This is not a brand new tug that is coming out of the ship-builders, so that (Solo Creed) might be worth US$500,000 or US$750,000, and when you arrest that, it costs you money to arrest it. You have to get an attorney to arrest it. You also have costs of keeping it under arrest, which are court costs; and Admiralty Marshal costs; and security costs,” she said.
“If it is alongside a port authority, you also have the cost of keeping her alongside, so there are berthing charges, marine charges, all of those things. When you arrest this vessel, how much of that cost can be recovered by the value of this vessel?” Alfonso said.
Alfonso said that, normally, after weighing all those factors, they would analyse whether it is worth arresting the vessel and incurring those associated costs.
“And if the owners turn up bankrupt and you have to sell the vessel, of course you are doing a fire sale now, and you get very little of the value of the vessel. So, one wonders whether the excitement of arresting this vessel is justified,” she said.
Alfonso said sometimes vessels are part of a P&I (Protection and Indemnity) club which is a mutual insurance association that provides insurance and other services to its members.
“So that those entities can put up security which might be over the value of the vessel, and then the vessel will be allowed to go its way. But in my initial searches as requested by a couple people, we could not find one of the 12 P&I clubs in the world that was covering this vessel,” she said.
“We are unlikely to have an insurance company or a P&I club coming out to put out security; and of course, if I am an owner and my vessel is worth US$750,000 and somebody is claiming US$35 million, well, I will tell them: ‘Here is my vessel—do your best’,” Alfonso said.
Alfonso stated that in such situations, creditors would pursue the owner of the vessel, but the owner could potentially declare bankruptcy.
“I would not be overly excited,” Alfonso said.
“The way it was announced (was) that this was the solution, that this was for sure. You are going to be putting out money. And unless there is a well developed jurisdiction in Angola to sell vessels and recover something closely approaching a commercial basis, unless there is a well developed jurisdiction to Angola in that effect, then it is likely to be in the loss territory,” she said.
Alfonso stated that during her time as a maritime attorney arresting vessels, she has personally encountered similar situations.
She said that in the mid-90s, she arrested an oil tanker valued at US$4 million in Trinidad and Tobago for a US$350,000 claim.
“When I went to arrest the vessel, the owner went bankrupt. I had to sell that vessel in order to get that US$350,000. Usually when you are talking about a claim, it is substantially below the value of the vessel. My cost of arrest would be covered, my cost of lawyers will be covered, cost of security, Admiralty Marshal—everything would be covered. I do not believe that I am seeing that scenario evolving here,” Alfonso said.
“The reason people use these older vessels—which don’t have proper insurance, and are not registered with a P&I club and so on—is if it is seized, as in these circumstances, then there is no real loss. If you have a pearl, or a gem, or a diamond of a vessel, you would not want it to be lost to Trinidad and Tobago,” she said.
Alfonso said that the Gulfstream being cut loose may indicate that the Solo Creed could also be sacrificed.
“If you have experience in these areas, you have to put that into the rubric: that they are always willing to lose that vessel in the case that something hits the fan. It has to be something that you are willing to sacrifice,” Alfonso said.
Up to August, nearly 60,000 barrels of fuel (which had spilled from the overturned Gulfstream barge being towed by the Solo Creed) had been removed from the sea and coast, including from the eco-sensitive Cove reef area in Tobago.
The Energy Ministry said it is also continuing to pursue recovery of the sums of money expended during the clean-up exercise from the International Oil Pollution Compensation (IOPC) Fund.
During the Standing Finance Committee in Parliament, Energy Minister Stuart Young expressed confidence that Trinidad and Tobago will recover most of the money spent on the Tobago oil spill.
Young said the Government has been successful in its application to the United Kingdom-based IOPC.
The IOPC provides financial compensation for oil pollution damage that occurs in member states, resulting from spills of persistent oil from tankers, its website stated.